Hey folks, I have to let you know about a new trading tool I have.
That bullish reversal call on CNBC on January 23rd? In addition to the other indicators I track, I have another "special" sentiment reading. Its become my secret weapon.
What is it?
You.
As a group, it seems that traffic to blogsites can be tracked as a contrary indicators — especially when the market is under pressure.
Note that the selloff in August, and then the more recent whackage in January, each created a major traffic spike — which led to a bottom, and a healthy bounce.
Sitemeter traffic to TBP as of January 30, 2008
>
Now, maybe the content here suddenly got much better. It could be that I suddenly became a whole lot more insightful, or perhaps my prose more poetic — but I doubt it.
What most likely occurred was the market turmoil generated an influx of new visitors.
Let us know when it happens again..I will put some $$$ to work.
I’ve updated my post and charts: (http://benbittrolff.blogspot.com/2008/02/fed-changes-really-scary-fed-charts.html)
Fed CHANGES Really Scary Fed Charts
Removing TAF makes a significant difference.
$50 billion to be exact.
TAF operations are ongoing. So this discrepancy would just continue to grow.
LIBOR is also starting to misbehave, again. Nothing too serious yet (not like before Christmas) but you get my drift. Stress is creepying back into the system.
The (counter trend) rally in risky assets should just about be over, if I’ve interpreted this correctly.
TheFinancialNinja
yes i’ve known for a while that i’m a great contrary indicator. if you’d like to help subsidize my losses i can email you whenever i “have a hunch” about the market.
Are you implying that we’re sheeple?
….baaaaaa!…..baaaaaaa!….
Seems straightforward enough: when the economic news is interesting, economic blogs get more hits. Those with more market exposure than myself (full disclosure: everyone) would probably find the word “interesting” insufficient….
Turmoil and uncertainty begs direction, or at least confirmation.
This blog has become a crucible for meaningful intelligent ideas about the state of the economy and the direction of the market. The financial media, you Barry, the readers that post comments; they all feed each other. You don’t get this anywhere else. Even Ben reads you and for all you know, he might even contribute comments. What do you think: what nickname does Ben use?
The stock market is rising again, and will probably continue to do so until, maybe, May and S&P 1500. Then we will get another nice dip to maybe S&P 1380. Then back up. This is going to be a profitable year for someone who trades the big ranges. And an OK year for buy and holders who don’t panic and sell at the bottom. My crystal ball can’t see the end of the year yet.
Astute sector buyers still have 15% – 20% in upside available if they move quickly. Europe, value, tech are still in the craphole, but rapidly climbing out. Even Japan might be ok. The yen is weakening again. But beware, as someone once told me, the laws of economics don’t apply in Japan in the same way they do elsewhere.
The Fed did it’s part. I am now doing mine by converting Wealth from recent market gains into Consumption. Lower rates will bring house buyers back into the market and their effects will start to become obvious later this summer. The market will dip around S&P 1500 because that level is just a little too high, at this time, to be sustainable.
BTW, I just read your piece about Ben Stein. Is he really that out of touch? I had no idea.
Doug Henwood of Left Business Observer, and a commentator on WBAI, makes a similar observation. He says reporters finally solicit his views on the economy when it seems direst, just before a recovery.
I don’t say it is a buy signal, just that the secret, unavowed fear of Wall St honchos is that Marx was right.
Barry, I like your blog as a corrective to wild short term optimism, and I enjoy the intellectual battle I have with some of your pessimistic readers.
I also think there are enormous opportunties today that won’t come around again for a few years. I have bought into a bunch of financial stocks because I think they are oversold, but I have hedged by marrying them with puts.
If some of the bank stocks hold over this period, I will have not only nice gains, but very juicy dividends.
Oh, Barry, Bespoke notes another indicator — the cover of Business week.
http://bespokeinvest.typepad.com/bespoke/2008/02/magazine-cover.html
Um, not at the open . . .
I’m much more interested in the Boston Herald blog today. The financial blogs are great, but are no match when it comes to evoking uproarious laughter.
Barry,
Dr. Brett at TraderFeed commented about his spike in traffic in January as well. The pattern makes perfectly logical sense: Investors look for answers as uncertainty and volatility increases, especially on the downside. Fear manifests itself in the herd much faster than any other emotion associated with investing.
I suspect the spikes in traffic at your blog would correlate best with troughs than peaks.
Thanks for the insight, as usual…
I come here every day… but when things are wild on wall street I tend to “drop by” more often.
Not an active trader, am retired and what we have is in pretty conservative vehicles. Still, I now have time to pay attention to what is going on.
I covered media stocks as a buy sider through the 2001 recession.
CNBC and bloomberg saw a large initial spike in viewers in the first months of the stock market decline.
However, as it continued to grind lower and the news and the averages got worse and worse people just turned off their sets because it was so depressing.
It would make sense that you would see a large spikes in viewers durning inflection points in the market.
>>My crystal ball can’t see the end of the year yet.>>
But yet you still are in denial about interest rates and have made the following statement as well:
>>Lower rates will bring house buyers back into the market and their effects will start to become obvious later this summer. >>
This is really simple RATES ARE NOT LOWER
GO look for yourself. Myself as well as many others have pointed this out to you SEVERAL TIMES.
You are what is wrong with the market…people that have no idea what is going on around them yet seem to profit regardless of how clueless about the original environment they are.
You say you have no crystal ball yet have made two predictions based on wrong assumptions about interest rates.
You and your money will soon be parted. I have no doubt about that.
Ciao
MS
IMO, merely a coincident indicator of market distress as participants seek out answers to allay their concerns.
I think the comments could be an indicator too. Look at most of the comments from the days we hit our lows. Looked like the world was coming to an end.
The world may still be coming to an end! Something to consider:
http://market-ticker.denninger.net/
This is probably a good thread to throw in a quote that hits on two of The Big Picture’s favorite topics – contrary market indicators, and Larry Kudlow:
====================
12/05 04:04 PM
The Recession Debate Is Over
Larry Kudlow
There ain’t no recession.
Today’s ADP private jobs survey of 189,000 could produce a 200,000 non-farm payroll job gain for November. I don’t know — these wacky BLS numbers are subject to huge revisions. But the ADP was a huge number. In fact, jobs seem to be picking up major steam from their August low, rising in September and October. And now I’m expecting a good increase in November to be reported by the BLS this Friday.
Plus, profits are stronger than people seem to understand. The ISMs are fine. Productivity, reported out today, soared to over 6 percent annually in the third quarter. That’s the best number in four months for output per person.
On top of that, business inflation is zero. Flat. Nada.
The recession debate is over. It’s not gonna happen. Time to move on.
At a bare minimum, we are looking at Goldilocks 2.0. (And that’s a minimum). The Bush boom is alive and well. It’s finishing up its sixth splendid year with many more years to come.
=================
Boy Howdy!
When someone says they’re from the Center for XXX XXX, what are they talking about? How do they get their money to pay salaries? Could I call myself the Cinefoz Institute and allow myself to be quoted as an authoritative source? Are many “Institutes” just euphemisms?
Prognostication: Today will be ok, but the stock market is uncertain at the micro level at this moment. Buy my newsletter and I will offer authentic forecasts.
Cinefoz Institute
As a new reader maybe I should explain myself? I am a blog reader, using bloglines, and currently have 60 tracked feeds. The buckets I use are: Economy, Energy, Environment, Science, General.
I’ve been an energy/environment reader primarily, but I’ve had an Econbrowser and a Marginal Revolution feed for years. I picked up Calculated Risk and The Mess That Greenspan Made … maybe last summer.
I am a pessimist about this situation, but I think the reason I’ve been branching out, and picking up more Economy feeds (now 13) is that I think “something’s happening.”
Might that be a root of the traffic, rather than a positive/negative indicator? It might indicate a junction … what that junction proves to be is of course the question that keeps us reading.
MS
you follow FOMC operation fairly closely, the Denninger link provided by Karen, any comment on his assessment of the situation.
cinefoz-
You mock predictive powers yet made two “predictions” using flawed understanding about interest rates. AGAIN… RATES ARE NOT LOWER….understand that…..
You are wrong about interest rates
But continue to make fun of others when you have no idea that the basis of your “position” is so backwards you can’t even understand basic rate calculations (or have no clue where to look for them)
Good luck with that.
Ciao
MS
Storm runner-
I am just as alarmed and surprised as they are. The banks taking the TAF’s and immediately placing them in the reserves area SHOULD have sounded an alarm bell. Remember this is the same system that has been reviewing the mono.’s for over two months now and puts out PR saying that “they do not anticipate loosing the AAA rating” and that is good for some crap rally. The smart ones know that this country has to point to an event or issue that can explain it all in one fell swoop…….it can’t but I do know that no one buys the SPY at .05-.10 OVER the ASK if you do not have intentions of manipulation, ask the CHinese what they’ve been doing with there dollars…I think we get to see daily evidence of that in our “rally’s” that happen out of nowhere.
Nothing surprises me at this point. I’ve said it before but I truly think that a nuclear bomb could go off and are futures would be up or that Ben would ride to the rescue with a rate cut before the market opened.
These things (the reserve requirement-apparently it’s not very enforceable as to be a requirement since there is no consequence for allowing the amounts to be so low-how can you start a bank run????) have made little or no difference since the market gets bought up at the sign of a bail out or someone places a rumor and it’s up 600 pts.
The market is a joke at this point……it is so propped up and tired ask yourself this question:
Did it really feel like the best week in 4 years???
Not when you can bully it up on programmed trading in thin volume.
Ciao
MS
and before the perma bulls ride in with guns blazing remember that in the last two weeks what you have rec’d from the Fed, Treasurey AND the congress. 1.25% rate CUT, stimulus package ($160b worth) AND the continuing repo. auctions above and beyond that recently announced $60 b.
Yea sounds like a bull market to me……
Most of you seem to forget or quantify the LARGE amount of help to keep equities at this level. And now you get $60 billion every two weeks to make it appear the banks are complying with reserve requirements.
More like a bullshit market
Ciao
MS
Market turmoil and the plunging housing market were what led me here in the first place, and are what keep me coming back to read what Wall Street experts and market prognosticators are thinking.
I would speculate that the readers of this blog may be categorized into 2 groups, i) a core following who visit regularly, and ii) new visitors during times of crisis, thus causing a spike in hits.
It would appear that the latter group is driven by fear and are looking for answers at this Blogsite during those times when their saviours at the Fed can’t save them no more!
Prime Rate 8.25% 9/1/07
Prime Rate 6.00% 2/1/08
Real Estate investors are starting to get active in the Southwest, with a liquid market of large vulture investors offering 30 cents on the dollar (cost of development) for finished improved lots. The publicly traded builders want the land inventory off of their books, and the vulture investors are more than happy to accommodate them. This type of activity is very similar to my experience with the RTC liquidation of the S&L portfolio in the early 1990’s.
Smart buyers were paying cents on the dollar for properties, with many of those properties at or near 100% vacancy rates. Back then, the buyers compared the cost to develop a similar property (infrastructure, zoning, materials, etc) vs. a firesale price, and found long term value, with a margin of safety, even with no current tenants. What was selling at $4 per foot is now at $25, with 18 years of rental income income to boot. It was a once in a lifetime opportunity deal for commercial property, built on the back of a bust. The same type of opportunity could present itself for informed real estate investors in the carnage of todays market. This is not an indorsement for the prices of today, as I have no opinion, but I am sure, that there will be fortunes made on the back of this carnage for the investors that have a nose for value (at the right price).
I’ve written about a similar spike on my site as well. In my case I got tons of search engine (Goolge!) referrals from people looking for Inverse ETFs. Of course they all got interested in those bearish ETFs right at the bottom.
With the increase of traffic, you get more of the hate Bush crowd, and kiss the whales crowd.
When things are good everyone is a genius. When they turn lousy everyone goes looking for clues…..
Cine-
Go look it up yourself (it’s available in several places)
Just because you are clueless doesn’t mean I have to think for you.
Or in your world I guess it does.
Ciao
MS
here’s a hint to Cinefoz and KK
The place to go and look for REAL interest rates are not at the Prime level. But keep thinking that as the MSM seems to think that as well.
Prime…….give me a break! who gets a loan for Prime in this market no less.
Keep drinking boys….
Ciao
MS
MS
Tell us what the rates are now vs. then if you know them so well
Posted by: Cine | Feb 4, 2008 12:42:21 PM
The posting copied above is a forgery. Please remove.
MS, here’s a hint … all interest rates are artificial and all actions from central banks are an accommodation to events as it perceives them, based on the rules and laws they operate under. The only REAL economy is the one in front of you at any given time. Jump in and work with it, because it doesn’t give a damn about you.
Since the economy responds to central bank actions, this means that the economy is a construct and not a natural system. This will always be true. There is no REAL or GENUINE economy waiting to burst out. There never will be.
To paraphrase Rumsfeld, you have the economy you are given, not the economy you wish you had or the economy you think should be there.
The stock market discounts it’s mass perception of the economy over the relevant range and will go up and down in spite of you and your idiotic beliefs.
MS, did you know there was a former Forumula One driver that was also named Michael Schumacher? What a concidence.
that nice Cinefoz but what are you really saying:
“I do not know where to look for them and have no clue as to what the real rates are
But here’s some quotes that have nothing to do with the original post so that I can feel better about not knowing what in the hell I’m talking about”
That is what you are saying….
it doesn’t change the fact that you are still WRONG ON INTEREST RATES.
Keep to the subject. IF you want to appear to be educated…..GO LOOK UP WHAT THE EFFECTIVE INTEREST RATES ARE FOR REAL PEOPLE IN REAL SITUATIONS….Not ones you create to agree with what you call an argument.
YOU ARE WRONG……
Ciaa
MS
June 2007 ……….. Feb. 2008 (Bloomberg)
30-year 5.46% …… 4.37%
10-year 5.32% …… 3.65%
5-year 5.14% ……… 2.79%
90-day 4.76% …….. 2.18%
30-year mortgage 5.48% , 4-year low (FreddieMac)
You quote donald rumsfeld???
holy shit Is that is the best you can come up with??? A disgraced bullshit artist who couldn’t lie correctly. Now I know where you went wrong…
Jayses you are farther gone than I thought.
Good luck with that
Ciao
MS
>>THE EFFECTIVE INTEREST RATES ARE FOR REAL PEOPLE IN REAL SITUATIONS>>
That take into account credit, down payments (most likely lack of them), past history and whatever add-ons that the borrower decides to add in based on qualifying requirements that change DAILY.
Now where do you get a Prime rate with no add-ons??? again for REAL PEOPLE IN REAL SITUATIONS???
The same place where the Easter Bunny, Tooth
fairy and cinefoz go to get them….
NOWHERE.
Ciao
MS
Credit worthy customers, and many “average” consumers that didn’t drink the kool-aid have access to the prime rate through credit lines, particularly of the home equity kind.
The prime rate is often used as a gauge to reset ARMs and other variable rate short term loans. It is used in the calculation of some private student loans. Credit cards and many other consumer loans have their rate pegged to the prime with plus the spread.
To dismiss the prime rate reduction as irrelevant is not rational, as a huge amount of people in this country will benefit from the lower rates we are seeing.
THIS IS ABOUT HOME LOANS NOTHING MORE…..
Apparently that Reading Comprehension course you took together didn’t pan out.
not about student loans, credit cards or ANYTHING ELSE.
“Credit cards and many other consumer loans have their rate pegged to the prime with plus the spread.”
PLUS THE SPREAD……
PLUS…………..THE …………..SPREAD
That’s what I thought
Ciao
MS
Just one bank example
Generally 15 Year term produces some of the cheapest rates available,
15 year Jumbo Rate, Points, Monthly, APR, Lock, 500,000 borrowed (typical CA purchase)
7.250% 0.798% $4,565 7.409% 30 $ 7,313
7.375% 0.714% $4,600 7.521% 30 $ 6,893
7.500% 0.634% $4,636 7.634% 30 $ 6,493
7.625% 0.554% $4,671 7.746% 30 $ 6,093
Conforming 200K borrowed typical (non bubble market)
4.875% 1.750% $1,569 5.213% 30 $ 5,861
5.000% 1.250% $1,582 5.261% 30 $ 4,861
5.250% 0.625% $1,608 5.416% 30 $ 3,611
5.375% 0.500% $1,621 5.522% 30 $ 3,361
5.500% 0.250% $1,635 5.608% 30 $ 2,861
5.625% 0.000% $1,648 5.695% 30 $ 2,361
It is readily evident from these quotes that the larger metro’s have lots of deflating to do. Purchases in the metro markets are largely in the jumbo catagory and rates are prohibitively expensive.
MS, I must admit I love the anger.
Stormrunner-
Both of them seem to let a story get in the way of actual facts.
There are many examples…….too many to list. But they all say the same thing.
Even those examples (above) assume many things that are no longer part of landscape. Those are the teaser rates and only have add-ons to increase the effective rate..
It’s pretty black and white for those that ALLOW themselves to see it.
Ciao
MS
Anger??? hardly……It’s you’re money however if you continue to cling to stupid assumptions (like ANYONE can get a loan at straight PRIME) then I suspect you will no longer have much of it left.
Anger is relative……….displaying continued ignorance against FACTS is just plain dumb.
You two have a lock on stupidity today….
Ciao
MS
i would say the bearish commentary on the blogs coincides w major stimulus moves by the FRB and govt as well. 225 bp drop in FF rates coincides w all these market bottoms. at some point they run out of ammo (sometime after the Nov election) and the bears are vindicated. big time.
MS
The rates listed are pretty accurate I have my Mortgage with this bank and shopped the rates with this index in ’04, managed a 4.375 15 year fixed.
The obvious tell as the rates listed are all 15 year fixed rates is that of the risk aversion present in the Jumbo, the rate spread can only be bought down by 40 basis points where there is an 80 point margin in the conforming.
Note last column is closing costs and “qualifying” thats another issue entirely
storm-
those are advertised rates. Your last sentence has got all one needs to know about what the real rates will be.
These two “tools” are convinced that anyone can walk up, qualify and then have a loan (AT PRIME) delivered to you. This is how the housing market is going to be saved.
I wish them luck in that hopeless endeavor.
BTW my wife is a loan broker so I know what I speak of….unlike Cinefoz and KK.
Even if you could get a loan at straight prime does that do anything about the bloated levels of inventory (that are about to get even bigger?
Nope and Nope.
Ciao
MS
You got me, I don’t even know what PRIME has to do with this conversation, the days of 80/20 ARMs are over and the 20 part of the 80/20 would be the only part of the loan reflective of prime., otherwise in the standard loan the rate is loosely based on the 10Y and risk aversion which as evidenced by the tables, which are todays rates to be 200 basis points. Median wage earners in CA can not afford a 200 basis point differential, they coundn’t even afford the teaser rates, housing must come down. The paper assets backed by these properties are evaporating as I type
Just as a point of reason any first time buyer in the seventh largest economy in the world is subject to a 2% premium on interest until houses move south of JUMBO. Roughly 10K more per year just for interest on a depreciating asset. What housing rebound. My understanding of PRIME would be in affecting HELOC’s and what not, anybody still doing this in this environment better have a serious equity cushion.
MS, We know the bad current landscape, but I am focusing on how to capitalize on the current situation. Unfortunately, there are many people that will not be able to survive this downturn as their problem was caused by the price they payed for the asset, which was to a large part was supported by a sham mortgage underwriting. Lower rates won’t do them any good as they need their current asset value to at the very least, remain constant. With the pool of potential buyers getting smaller due to tough underwriting standards, the thought of asset prices holding firm seems bleak. However, there will be many people that will be able to capitalize on the washout, some in a major way. Those folks will benefit from lower rates. As to the timing, that is where the real debate is, with the regional factor another variable to throw in the mix.
“BTW my wife is a loan broker”
Now I understand. I hope at least you have a good job.
Coincidence does not necessarily mean causality.
Street Creds, don’t worry. The “I-vote-for-incompetent-leaders” crowd is probably still represented.
KK-
There are people in the mortgage biz that didn’t fuck with people and there emotions about purchasing a home. It’s too bad that you and cinefoz don’t understand BASIC scales of economies and have to resort to cheap shots in order to make yourselves feel better.
You both will be poorer in the coming year with the failed strategy of hope and hold.
but you will have quite alot of company as the I-banks are doing the same thing.
Get a clue
Ciao
MS
Another new economic indicator: the amount of junk in my (snail) mail box. About three weeks after Christmas, the number of catalogs (which is usually when the first Spring fashion begins to come in)has fallen off a cliff. The only thing that keeps on coming – those 0% balance transfer credit card solicitations, addressed to my 20-something son.
I have done some quick analysis using blog traffic as the underlying indicator; transformed in a manner like on-balance-volume.
http://zignalsblog.blogspot.com/2008/05/blog-traffic-and-market-reversals.html
Initial suggestions show blog traffic may help mark not just market bottoms but tops too.
Best wishes,
Declan